As a financial coach helping the military, I’m always preaching the importance of setting aside money for the unexpected (soapbox and all).
Life is going to happen. It’s not a question of if something is going to cost you money? It’s, when and how much? That statement is even truer statement for Service members and their families because they also have all the expenses from transitions that come with military life. The packing lists, PSC and deployments add up quick. That’s why you can’t just plan for the things that happen each month. You must go above and beyond to be prepared for when it all comes due—when stuff starts coming out of the woodwork!
This past week, I had a personal experience of just that, a bunch of extra expenses coming out of the woodwork. It illustrates my point of planning for the unexpected by setting aside money. In less than five days time, we had the following expenses come due.
1. Due to colder weather, our electricity bill was about $150 more than our average electricity bill.
2. My son and I needed eye exams which costs $180 for both of us because our insurance doesn’t cover yearly eye exams. I won’t even start in on the fact that I had Lasik five years ago.
3. As a result of our eye exams, my son and I both needed new lenses and frames which set us back $605. I’ll be honest that I spent $50 extra because I really wanted a set of Coach frames. I could have made it by with more basic (boring) frames for $50 less. Because of this, I will say we had to spend $555.
4. The bill for my son’s field trip to Washington D.C. that I’m chaperoning came due. That was $600.
5. My husband was out of town and needed me to overnight him some required materials for work, twice, which cost us around $47.
6. A deer, my husband, had processed was ready and cost $70. This cost was necessary because there’s no way in H-E-double hockey sticks I’m allowing my husband to cut up a whole deer on my kitchen island!
7. My oldest needed new shoes because he had a hole large enough that we thought his teachers might start to think we’re horrible parents. $25
8. And the really fun one, we had to buy a $30 animal trap because we have an unidentified and uninvited guest living under our house. I’d like to be able to say we’ve evicted him, but Operation Moving Day is still in progress (I’ll let you know how it turns out). One of the perks of homeownership!
If you weren’t keeping track, that is $1,657 we had to spend in addition to our regular monthly bills. I’m not going to lie, it stung. But thankfully we practice what I preach and were able to cover our expenses. I put together some tips on how to handle when it all comes due.
Here’s what you should do when it all comes due.
1. Don’t freak out
Stay calm. Don’t fold like a lawn chair. When an unexpected expense drops in your lap, it can be tempting to get upset, especially when it’s a lot of money. Keeping calm with help you make a good decision in the moment instead of a poor one that might cost you more money in the long run.
2. Stop spending
Immediately stop spending money on the extras until your back on budget. Hold off on any nonessential spending you were planning. Reduce or eliminate going out to eat or buying extras like Starbucks or Monsters. Remember it’s not forever, it’s just for right now until you sort our your expenses.
3. Review Your Budget
Look at your budget to find extra money to cover the unexpected costs. If you can’t find extra money in your budget that is when you pull from savings. If you don’t have the money in your savings, then begin reducing spending in your food budget or your gasoline spending.
4. Review the Unexpected expenses
If you don’t have the money to cover an unexpected cost, take a hard look to see if you can avoid paying that expenses temporarily. For example, I did need new glasses, but I could have delayed purchasing mine (not my son’s) a couple of weeks until I could save/find more money. Or we could have called everyone we know to see if they had an animal trap we could borrow to catch our uninvited critter. Try to avoid and/or delay expenses (if it doesn’t cost your extra) until you have the money in hand.
5. Use Free Resources
If you don’t have money in savings or your budget, then use free resources to help see you through the unexpected expenses. This site, Aunt Bertha is a great resource to find services in your local community.
6. Build Savings
After you get through the unexpected expenses either build back up your savings or if you don’t have savings, start!